Wellington---New Zealand's central bank held interest rates at 3.5 percent on Thursday, ruling out any immediate hike but saying monetary policy could be eased if inflation is lower than expected.
The Reserve Bank of New Zealand's rhetoric has altered since its last rates decision in March, when it predicted "a period of stability" in the official cash rate (OCR).
Since then, official data has put New Zealnd's headline inflation rate for the year ending March 31 at a 15-year low of 0.1 percent, well down on the bank's target of 1.0-3.0 percent.
Governor Graeme Wheeler said the bank's focus was on medium rather than short-term inflation, but he could rule out lifting rates from their current level.
"The bank expects to keep monetary policy stimulatory, and is not currently considering any increase in interest rates," he said in a statement.
He was less definite about prospects for a rate cut, saying it would depend on the evolution of inflationary pressures.
"It would be appropriate to lower the OCR if demand weakens, and wage and price-setting outcomes settle at levels lower than is consistent with the inflation target," he said.
The central bank has left rates unchanged since July last year when it completed a series of hikes that took the base rate from 2.5 to 3.5 percent.
AFP
